![]() However, as the Executive Order also purports to eliminate the component test, in favor of a value based test, it is unclear how the numerical threshold will be applied to the value test. 2 Under the Executive Order, the FAR Council is to consider raising these numerical values yet again, though the Executive Order is silent on how much the Biden Administration would like to see these numbers increase. The Trump Administration’s Executive Order 13881 (Maximizing Use of American-Made Goods, Products, and Materials) instructed the FAR Council to increase the numerical threshold to 55% for domestic end products not “wholly or predominantly of iron or steel” and to 95% for iron and steel end products. components of a manufactured end product not “wholly or predominantly of iron or steel” had to be 50% or more (excluding integration costs) to qualify as a domestic end product. The second change increases the numerical threshold for domestic content required to qualify as a domestic end product or domestic construction material. In addition, because the Executive Order does not make any changes to the COTS exception to the component test, the Executive Order’s changes to the component test will likely not be felt by manufacturers that sell COTS items to the government. ![]() job-supporting economic activity (perhaps such as research and development) to qualify as a domestic end product. ![]() components or raw materials will need significant value-adding U.S.-based manufacturing or other U.S. However, even at this early stage it seems reasonable to speculate that products manufactured from non-U.S. job-supporting economic activity.” Whether a particular product will be affected by this rule change will require a product-by-product analysis possible only after the FAR Council determines how value will be defined and calculated. Under the Executive Order, the FAR Council has been instructed to replace the current cost-based component test with “a test under which domestic content is measured by the value that is added to the product through U.S.-based production or U.S. Under the current regulations, for an end product to qualify as a domestic end product under the BAA, it must be “manufactured in the United States,” and the “cost of the components mined, produced, or manufactured in the United States” must exceed “50 percent of the cost of all its components” or the product must be a “commercial off-the-shelf” (COTS) item. The first, and most important, change is to the component test. The regulations under review include (1) the “component test,” (2) the numerical threshold for domestic content requirements for end products and construction materials, and (3) the price preferences for domestic end products and domestic construction materials. How will the Buy American Act component test and other requirements change?īy July 26, 2021, the Federal Acquisition Regulatory Council (FAR Council), which has authority to promulgate regulations relating to government procurements, is directed to propose revisions to certain BAA regulations for notice and comment. manufacturing through changes to the “component test” under the Buy American Act (BAA) and by centralizing and potentially limiting the availability of waivers under “Made in America Laws” as well as the use of exemptions under the Buy American Act. The Executive Order is designed to increase reliance on U.S. On January 25, 2021, President Joe Biden signed Executive Order 14005 entitled “Ensuring the Future Is Made in All of America by All of America’s Workers” (the Executive Order).
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